Obstacles that we face as a nation in establishing a “more perfect union.”
The following post has two assignments namely;
1.Obstacles that we face as a nation in establishing a “more perfect union.”
Identify 4 successes we have achieved and 4 obstacles that we face as a nation in establishing a “more perfect union.”
2.You Tell Me, Am I a Lease?
Auto Inc. (Auto) is a company based in New York that manufactures automobiles and
exports the finished vehicles to Europe. Auto manufactures two models; the most popular
model is a four-door sedan (Sedan), and the other is a less common, highly customizable
luxury sports car (Luxury Car). Auto contracts Trans-Atlantic Inc. (Atlantic) to ship its
products to Europe. Atlantic has a fleet of 10 multi-use shipping vessels, each with
capacity for 2,000 vehicles.
The terms of the shipping contracts are as follows:
x Sedan contract terms:
o The term is five years.
o MV Manhattan, a ship in Atlantic’s fleet, is dedicated to shipping Auto’s
Sedans for the term of the contract.
o Auto determines (1) which European ports receive shipments and (2) the
order in which deliveries are made to the ports; Auto instructs Atlantic
o Auto has the option to send the ship below capacity. If the ship is below
capacity, Atlantic cannot use the excess capacity to ship products of its
x Luxury Car contract terms:
o The term is five years.
o Atlantic is required to deliver shipments of Luxury Cars within five weeks
of notification from Auto that an order of Luxury Cars is ready for shipping.
o Atlantic may choose any ship from its fleet to complete the request.
o Auto may provide 250 to 2,000 Luxury Cars in a single request; however,
shipping requests of Luxury Car generally do not exceed 500 vehicles in a
single request because of the lower production volume and longer
manufacturing time of Luxury Car.
o Atlantic has the option to use excess capacity to ship products of its other
o After notification from Auto that Luxury Cars are ready to ship, Atlantic
determines when within the five-week period to ship the cars, as well as the
Auto’s CFO understands that the new leasing standard has certain provisions that may
affect how the company treats contracts of this nature.
Analyze the above and prepare a memorandum addressing the impact (if any) of the new
leasing standard on Auto’s shipping arrangements for the following considerations:
Case 17-1: You Tell Me: Am I a Lease? Page 2
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1. Determine whether each of Auto’s contracts with Atlantic for Sedan and Luxury
Car contains an identified asset.
2. Determine whether each contract conveys the right to control the use of the
identified asset to the lessee.